Enjoy your January 5th hand-crafted Brew!
QUOTE OF THE DAY
“Find new friends” — Wendy’s Twitter account, hilariously roasting some of its not-so-kind followers yesterday…before accidentally posting a hate symbol on its feed. It’s hard to be hip.
Market Snapshot
- U.S stocks pushed forward to close near record levels on Wednesday as minutes from last month’s Fed meeting reiterated confidence in the economy
- Shares of automakers surged after U.S. car sales locked in a record seventh straight year of gains—Ford (+4.61%), Toyota (+2.23%) and Honda (3.55%) all posted strong sales figures in December
- Bitcoin reached an all-time high on Wednesday, driven by increasing currency control in countries such as China, India and Venezuela, where people are adopting the cryptocurrency to protect their savings
Calling All Cord Cutters
…CBS (+2.10%) inks deal with Hulu’s live-streaming service. By subscribing to Hulu’s upcoming live-streaming service, customers will be able to enjoy CBS’s NFL games, March Madness and CBS Sports Network. The best part? The service will cost under $40 and include Hulu’s large video on-demand library. Not a bad deal. The collaboration is particularly interesting considering Hulu is owned by CBS’s main competitors: Disney (+1.28%), Fox (+1.04%), Time Warner (-0.05%) and Comcast (+1.19%). Keep your friends close and your enemies closer.
Time to Cash Out
…Former CEO Rex Tillerson to sever all ties with Exxon Mobil (-1.10%). It was quite the payday for Tillerson, who’s distancing himself from the oil behemoth in order to adhere to conflict of interest requirements, as Trump’s choice for Secretary of State awaits his confirmation hearing. If confirmed next week, two million Exxon shares (worth $182 million) that Tillerson would have received will be sent to an independently managed trust, and he’ll sell all 600,000 shares of Exxon he currently owns. Sec. of State is one expensive job title.
More Money For Tech
…And for SoftBank, too. Apple (-0.11% and Qualcomm (+0.11%) are the latest investors in a new $100 billion technology fund that’s been making headlines worldwide. The fund, primarily run by Japanese telecom giant SoftBank, will invest in emerging technologies ranging from artificial intelligence to the Internet of Things. Since when does Apple invest in venture capital funds? We’ll trust they’re up to something clever enough. If Apple and Qualcomm weren’t a big enough deal already, Oracle and the Saudi Arabian government are already on board. VC remains the place to be these days.
Tesla Hits an Impressive Deadline
…Its $5 billion Reno-based Gigafactory started mass producing lithium-ion batteries yesterday. Tesla (+4.61%) CEO Elon Musk is notorious for aiming high and falling short of his lofty goals, but this battery factory won’t count among the misses. The U.S. is also thankful—in addition to creating 2,900 jobs, it also brings the U.S. into the lithium-ion battery industry that has long been dominated by China, Japan and South Korea. But Tesla’s not building this factory for good PR. Musk has another (lofty) goal of selling 500,000 Model 3 cars by 2018…and there’s simply not enough batteries in the world at a cheap enough price to make that possible. Hence, Gigafactory.
The Results Are In
…And they’re not too surprising. In case you missed the big news, at its December meeting the Federal Reserve raised interest rates for just the second time since the financial crisis. According to the minutes—released yesterday—there’s plenty of logic behind the hike, especially when it comes to fiscal policy. And when we say fiscal policy, we mean President-elect Trump’s stimulus-boosting plans. The Fed seems to see itself as a counterweight to Trump’s promises of tax cuts and infrastructure and defense spending. There are also concerns that quicker economic growth as a result of these policies might require higher interest rates to ward off inflation. Much of this won’t be much clearer until after January 20, so for now, the key takeaway is that Janet Yellen and Co. will be keeping a close eye on Mr. Trump.
Other Stories
- Amazon is launching its own athleisure brand
- Chase Sapphire Reserve card’s huge bonus will be slashed
- Medium lays off 50 employees, shuts down New York and D.C. offices
- Disney recalls baby Mickey sweatshirts for choking hazard
Economic Calendar
- Monday: Markets Closed (New Year’s Day Observed)
- Tuesday: ISM Manufacturing Index (+); Construction Spending (+)
- Wednesday: Auto Sales (+); Fed Meeting Minutes
- Thursday: Walgreens, Monsanto, Ruby Tuesday Earnings; ISM Non-Manufacturing Index; Weekly Jobless Claims; Private Employment Report
- Friday: December Jobs Report; International Trade
The Latest Endangered Species
Public companies. In the 20th century, the ultimate goal for most companies was to go public with an IPO and raise capital from ordinary investors. But thanks to an abundance of private money available from giant investment funds, this goal no longer seems as important. According to the University of Chicago, the golden days of public companies might be long gone. Here are the facts:
- In 2016, there were 5,734 public companies in America. Compare that to 9,113 public companies in 1997. Need we mention that the economy has nearly doubled in size since 1982?
- Unsurprisingly, the tech industry has been the biggest culprit in the war on IPOs. In 2016, tech companies raised $4.3 billion from 26 IPOs—a big chunk, until you consider that tech companies also raised $19 billion from late-stage private funding.
- In total, last year 111 U.S. companies went public—raising $24.2 billion. That’s a 33% drop in dollar volume from 2015, the biggest drop since 2003. Enjoy public companies while you can, folks.
Interview Question of the Day
You’re in a room that has three switches and a closed door. The switches control three light bulbs on the other side of the door. Once you open the door, you may never touch the switches again. How can you definitively tell which switch is connected to each of the light bulbs? (Answer)
Business Person of the Day
Walter “Jay” Clayton was selected by Trump yesterday to head the Securities & Exchange Commission, or the SEC (not to be confused with the college athletics conference). Clayton made his career as a top Wall Street lawyer. Now, he’ll be heading the organization that watches over the very institutions he once represented. Critics say this is a classic example of putting the fox in charge of the henhouse, while supporters say an insider is just what’s needed to police Wall Street. We’ll see.
Food for Thought
Swedes looking forward to a six-hour workday just got some bad news. A two-year experiment that cut working hours for nurses while maintaining their pay levels has ended, and it was determined that the costs outweighed the benefits. Unfortunately, to cover the reduced hours for the 68 nurses, it had to hire 17 extra staff at a cost of about 12 million kronor ($1.3 million). It was worth a try.
Welcome to an all-new section of the Brew. And guess what—it’s all about you! Last week, we asked you, our loyal Brewers, for feedback on the ONE thing not in the Brew right now that you’d like to see in the future. Turns out, there’s a LOT of stuff you all would love to see. Here’s a tiny sampling of the feedback we got:
From Christian L: “One thing you guys might want to throw in is some gifs or pictures. I know this isn’t buzzfeed, but a little color wouldn’t hurt anyone.”
Probably because we have a color blind editor! In all seriousness, you’re totally right. A big part of giving you the best, most engaging content is through aesthetics, and we want to step up our business eye candy game.
From Koory E: “Business concept of the day – I know in the past you’ve done a business definition of the day, but if you were to really expand on this and delve deep into a specific topic each day it would be very useful.”
We’re definitely going to make a push to find an important business concept or storyline each day and expand on what you need to know and why it’s important to you. Great suggestion!
From Tyler K: “Wouldn’t mind an audio/podcast version of the daily emails”
Wouldn’t we all. This has been a common suggestion for some time, and we’re still on the hunt for a voice that’ll make a cat purrrr, so stay tuned.
From Sam B: “Sports news! Please!!”
We got this from a lot of you. We’ll try our best to start including more stories on the intersection of sports and business (also known as sports business).
From John P: “First thing – you guys are straight homies. If we were in the same city, there’s no doubt we’d bust a phat chill”
Winner for most unique response. You keep doing you, sir.